UPDATE 2-Norway oil service strike could escalate at short notice -union

* More than 300 workers on strike

* So far affecting drilling operations, not oil or gas
output

* Conflict is over the pay of more than 6,500 union members

* Strike in 2006 lasted for six weeks
(Adds comment from Shipowners' Association)

By Joachim Dagenborg

OSLO, Sept 29 A strike involving Norwegian oil
service workers could be expanded at any time, but no decision
has yet been made on whether to escalate the dispute, trade
union Industri Energi said on Thursday.

"We're satisfied with the current level of the strike but
are monitoring continuously and can't rule out further
escalation at very short notice. It could happen at any time,"
union official Ommund Stokka told Reuters.

"I won't rule out an expansion ahead of the weekend," he
added.

State-mediated wage talks broke down on Sept. 21, triggering
the strike among more than 300 workers at the Norwegian units of
Schlumberger, Halliburton, Baker Hughes
, Oceaneering and Oceaneering Asset Integrity.

The negotiations were on behalf of about 6,500 union members
at around 30 companies.

The strike affects the operations of subcontractors to the
oil industry, and could have consequences for oil and gas output
in the case of prolonged industrial action, the union and
employers have said.

The union has so far targeted drilling operations, while the
output of oil and gas has been allowed to continue, making it
less likely that the government will apply emergency powers to
intervene in the strike.

"We see that the strike is affecting the drilling of wells,
as intended," Stokka of Industri Energi said.

The Norwegian Oil and Gas Association (NOG), which
negotiated on behalf of employers, has said more than 350
workers face temporary layoffs as a direct result of the halt in
drilling operations.

Six or seven exploration rigs have been idled by the strike,
as well as the drilling of new wells at some production
platforms, NOG said.

"There's very little dialogue between the parties at the
moment, NOG chief negotiator Jan Hodneland told Reuters, while
adding he was ready to resume talks at any time.

"Each strike is unique, but in 2006 we had a similar one
that lasted for six weeks. I was hoping we could resolve things
more quickly this time, Hodneland said.

Separately, the Norwegian Shipowners' Association, which
represents the interests of rig owners, said it expected up to
ten rigs to be idled during the week.

"Since the strike started on Sept. 21, seven rigs have been
idled and during the week there will be ten rigs idled and more
than 1,700 employees not working," it said in a statement on
Wednesday.

Norway is western Europe's top oil and gas producer, with
state-controlled Statoil its largest firm.
(Writing by Terje Solsvik, editing by Gwladys Fouche and David
Evans)